Asia FX on guard before payrolls data, yen rebounds amid likely intervention By Investing.com

Investing.com — Most Asian currencies rose slightly on Friday, benefiting from a lower dollar as markets retreated ahead of key US jobs data that is likely to weigh on interest rates.

The dollar was also under pressure due to the recovery of the Japanese yen, which moved further away from its lowest levels in 34 years amid what appeared to be government intervention in currency markets.

The dollar's weakness has given regional currencies some room to breathe, although they are still suffering heavy losses amid prospects of US interest rates remaining high for a longer period.

The Japanese yen rose on potential intervention, and USD/JPY is at a 3-week low

The Japanese yen saw extended gains on Friday, as the pair – which has been inversely moving towards strength in the yen – fell 0.4% to 153.02. The pair briefly reached a three-week low of 152.9.

The USD/JPY pair is set to lose about 3.4% this week as it fell from its highest levels in 34 years. Traders and analysts attributed this decline largely to Japanese government intervention in the currency market.

The USD/JPY pair rose to 160 earlier this week. Traders said that this level is the new line of intervention in the currency market.

Domestic Japanese markets were closed on Friday. But lower trading volumes also helped the yen.

However, the factors that led to the yen's recent weakness remain, most notably the possibility of higher interest rates in the United States for a longer period.

Broader Asian currencies rose slightly, benefiting from the dollar's overnight decline. The Australian dollar pair rose by 0.2%, with markets preparing to receive possible hawkish signals from next week. Hotter Australian inflation readings saw markets expected to largely beat expectations of any interest rate cuts by the Reserve Bank of Australia in 2024, giving the Australian dollar some strength.

Trading volumes in Asia remained weak due to market holidays in Japan and China.

The South Korean won pair fell by 0.3%, while the Singapore dollar pair fell by 0.1%.

The Indian rupee pair fell slightly, and was trading well below its record highs recorded in April.

The dollar stabilizes after the losses it incurred overnight, and awaiting the release of the non-farm payrolls report

The US dollar stabilized in Asian trading after declining overnight, as pressure from the yen and expectations that the Federal Reserve will not raise further interest rates weakened the US currency.

The focus is now squarely on April data, which is due later today. The reading has consistently beat estimates for the past five months, with any signs of continued labor market strength giving the Fed more room to keep interest rates higher for longer.

The Fed signaled earlier this week that it has no plans to cut interest rates in the near term, especially in the face of flat inflation.